iPad Mini: Fact or fiction?

Hot on the heels of Google’s Nexus 7 tablet announcement, the news broke that Apple might, maybe, possibly release a smaller, cheaper version of the iPad. This rumor has been around since the original iPad was released but it gained momentum when claims emerged from Asia that Apple had ordered smaller tablet screens. Nothing has been confirmed by Apple or its suppliers, but that hasn’t stopped the rumor mill from grinding on.

The iPad Mini is now expected to be announced in October alongside the new iPhone 5. It will supposedly have a similar form factor to the new Nexus 7 and analysts are incredibly excited by the prospect. Everyone is wondering how much power the new iPad will be packing and that all important price point.

Why wouldn’t Apple release a 7 inch iPad?

In late 2010, Steve Jobs spoke out about the smaller iPad rumors. “The reason we won’t make a seven-inch tablet isn’t because we don’t want to hit a lower price point, it’s because we think the screen is too small to express the software,” he claimed. If you’re interested you’ll find the full Jobs interview at Engadget.

It’s perfectly possible that new CEO Tim Cook has decided to pursue a smaller form factor now that Jobs is gone, but the idea that Apple has to hit this segment of the market to compete with devices such as the Nexus 7 doesn’t ring true.

Does Apple do budget?

Two years of smaller iPad rumors is nothing compared to the five years of rumors we’ve had about a budget iPhone, which has never materialized. The iPhone Nano or whatever you’d like to call it has never left the news despite the complete lack of evidence to support its existence. Apple appears to be quite content at the premium end of the market.

Taking a look at Apple’s second quarter 2012 results, it isn’t difficult to see why it feels the need to compete in the budget category. It made $11.6 billion profit largely on the back of selling 35.1 million iPhones and 11.8 million iPads. Sales of both devices are steadily increasing and its market share is very healthy. None of its competitors have anything close to the riches that Apple can boast and the gap is getting larger.

Why would Apple risk such a comfortable position to compete with devices that are being sold with far smaller profit margins? Let’s face it — even if Apple releases a mini iPad, or a smaller iPhone for that matter, it’s not going to be a budget device. There’s no way they’ll produce something similar to the Nexus 7 and sell it for as little as $200 — unless, somehow, it can produce such a device for much less than Asus and Google, who are selling the Nexus 7 almost at cost. Amazon is also willing to lose money on the Kindle Fire to try and get a toehold in the market.

The Apple brand is synonymous with quality and elegant design. Consumers seem willing to pay a little more for what is considered an aspirational brand. In the realm of PCs, it’s already clear that Apple can and does charge more for comparable hardware specs than other brands, but with the iPad, Apple’s prices are actually lower than most of its competitors. Google and Amazon’s budget tablets are some of the only strong budget competitors.

But it makes sense

A smaller iPad makes sense for a couple of reasons.

If the smaller form factor is desirable to consumers because they want something more portable, then it’s probably a space that Apple wants to enter. Much depends on why people are buying smaller tablets. If the size is more comfortable for reading then that would account for the Kindle Fire and Nook Tablet successes. How the Nexus 7 performs will reveal more.

Smashing the competition could be another valid reason for a mini iPad release. Apple is engaged in an all-out war with Android on various fronts, not least in the courts. Perhaps the prospect of denting competitor’s attempts to get into the tablet market is enough? Though a defensive move seems unlikely. As it stands according to IDC Apple holds a 68 percent share of the tablet market. The competition should be feeling the pressure, not Apple.

Fact or fiction?

Anyone who follows the tech world will know that rumors and analyst predictions are mostly speculation. People love to talk about Apple and what it might do next. Until they actually confirm a smaller iPad or a budget iPhone, we’re in the dark.

I’ll jump down from the fence for a minute and speculate myself. Yes, I think the iPad Mini might come to fruition, but it won’t be at a budget price point because Apple won’t sacrifice margins. As for the budget iPhone: I don’t see it. If people want a cheap iPhone they will probably have to buy an old one. Budget devices don’t fit with Apple’s brand.

What do you think? Post a comment and tell us if you think the iPad Mini or budget iPhone will become a reality and why.